Budget director warns of loss of federal funds

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The state budget director is warning lawmakers that they may have to add as much as $105 million to the budget for higher educuation in order to preserve hundreds of millions of dollars in COVID-19 relief money coming to the state for education.

Adam Proffitt sent a three-page memorandum to the governor and lawmakers warning them about a shortfall in state funding required to match what the federal government funnels into the state for higher education as well as elementary and secondary schools.

Proffitt told lawmakers that the federal government has changed the way it calculated the amount of the so-called maintenance of effort – or the state’s match – in such a way that it means the state will come up short of the needed funding.

“If Kansas is to be found out of compliance with the (maintenance of effort) for either Higher Ed or K-12, then it risks losing federal funding for both K-12 and higher ed,” Proffit wrote.

The amount the state is short is unknown with certainty but is believed to be somewhere between $85 million and $105 milllion.

At stake is hundreds of millions of dollars that the state is expected to receive in COVID relief money for higher education as well as elementary and secondary schools.

It was unknown just how much would be at risk if the state fails to meet its matching requirement.

Proffitt noted that the federal government may not just try to recoupĀ  the amount that state comes up short in its maintenance of effort.

“The recoupment could potentially exceed the amount by which we miss our (maintenance of effort),” he wrote.

“Conversely, the penalty provision language is not prescriptive; this means that, while (U.S. Department of Education) has full authority to enforce a host of penalties, they are not required to do so, if they feel a state made a good faith effort or demonstrate other mitigating circumstances that led them to be out of compliance.”

Proffitt recommended that the Legislature increase the appropriation for higher education by $53 million in fiscal year 2022 and $106 million in fiscal year 2023.

He said that would put the state in compliance with the maintenance-of-effort requirement.

He also said the state couldĀ  simultaneously seek a waiver from U.S. Department of Education for missing the matching requirement.

“This recommendation is intended to demonstrate a path to compliance by significantly increasing the level of state support dedicated to higher ed over the next two years, while also requesting flexibility from USDE for the time it takes to become compliant, given the size of the investment required from the state,” he wrote.

“I believe that, with this recommendation, USDE will recognize that Kansas is committed to funding higher ed,” Proffitt wrote.

“They will still want us to show a commitment to meeting the maintenance of effort standards of maintaining proportional funding for higher ed, in order to receive federal support,” he said.

Sen. Rick Billinger, chairman of the Senate Ways and Means Committee, said lawmakers are looking at what options to pursue.

“It is a concern,” Billinger said. “We’re looking at any way we can address it.”

He noted that the governor has proposed cuts to higher education, but the Legislature replaced some of that money.

House Appropriations Committee Chairman Troy Waymaster said he was aware that the state would need to add more money to the budget to meets its federal matching requirements. He said he heard figure was closer to $90 million.

Waymaster said he believed Proffitt’s assessment was correct. But he thought there was money available to cover the shortfall given the most recent revenue forecast.

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